Encouraging democracy is one goal of most industrialised nations’ foreign economic policies. Formulating such policies requires an understanding of the political-economy logic governing democratic transitions. This column describes an important recent advance in theoretical thinking on the military’s role.

Throughout history, the military has been concerned with much more than national defense. In Imperial Rome, for instance, by the era of the mid Empire it had become customary for the military to influence the selection of the new Emperor. In modern times, virtually all Latin American and African nations have seen military interventions, often culminating in military coups and the emergence of military dictatorships. There are also instances of military involvement in domestic politics, even in apparently consolidated democracies. In 1958, the democratically-elected French government was forced to back down in a confrontation with a unified military command.

While, economists have been studying the political logic of transitions to and from democracy (e.g. Wintrobe 1998 and Dixit 2006), the military’s role has been largely ignored. Our recent work, A Theory of Military Dictatorships, takes a first step towards a systematic framework for the analysis of the role of the military in domestic politics. Our objective is to ultimately understand what types of nondemocratic regimes can survive with the support of the military, which regimes will generate interventions from the military, and why the military may align itself with some segments of the society against others.

Our basic analytic framework is simple. Two groups, the elite rich and the citizens, are in conflict under democratic and nondemocratic regimes. Under democracy, redistributive policies benefit the citizens at the expense of the rich. Under oligarchy the rich keep their wealth but have to create (and pay) a repressive military to maintain them in power. A repressive military is a double-edged sword, however; once created, it has the option of attempting to establish a military dictatorship, seizing power from democratic or oligarchic governments. This is the political moral hazard problem at the core of our framework.

The framework helps us think about the military’s relationship with oligarchies, specifically the conditions under which the military will act as a perfect agent of the elite in oligarchies, and the conditions under which the military will turn against the elite and attempt to set up its own dictatorship.

The framework also clarifies thinking on the military’s role in transitions to democracy. The key element concerns the credibility of future pay-offs. Since oligarchies need a repressive military in ways that democracies do not, the oligarch’s commitment to future pay-offs is credible while those of a democratic government may not be. Consequently, our framework suggests that military coups are more likely to take place against democracies than against oligarchies because of the inability of democratic regimes to commit to not reforming the military in the future. Nevertheless, military coups against oligarchies are also possible when the political moral hazard problem is sufficiently severe. The point turns on the assumption that there is a probability that coups against oligarchies will fail.

This perspective also suggests that military coups may be more likely when the external role of the military is more limited. When a strong military is needed for national defense, democratic regimes can also commit to keeping a relatively large military, thus reducing the incentive for military takeover at the early stages of democracy.

This framework also predicts that the historical relations between nondemocratic regimes and the military are important for the consolidation of democracy once this regime emerges. If a powerful military has been created by the elite to prevent democratization, then this military will be present at the early stages of the nascent democracy. However, since democracy does not have as much of a need for coercion as the nondemocratic regime, the military anticipates future reforms by the democratic government to reduce its size and power. This anticipation induces the military to take action against nascent democratic regimes, unless credible commitments for the continued role of the military in politics or other significant concessions can be made.

Other factors that are highlighted as important by our framework include the extent of income inequality and abundance of natural resources. Greater inequality increases the conflict between the elite and the citizens and encourages oligarchic regimes to maintain power by using stronger militaries. This increases both the risk of military intervention during the oligarchic regime and also once democracy emerges. Natural resources further increase the political stakes and make it more difficult to prevent the political moral hazard problem because the military can exploit natural resources once it comes to power. As such, they often make military interventions more likely.

Conclusions

One of the important implications of this general research program is that, when trying to shape or influence transitions to democracy, it is important that policy makers consider the complexities of the three-way interactions between the elite, the military and citizens. Our theory is a step towards a systematic framework for the analysis of the role of the military in domestic politics and will hopefully spur more theoretical and empirical research to understand the factors that facilitate the emergence and persistence of democratic regimes.